All Forum Posts by: Kaaren Hall

@Anand Ariyappan I have a list of non-recourse lenders to share.  Please email me at the address in my signature.  ~Kaaren Hall

@Tessa Mac You can certainly rollover your old 403b plan into a self-directed account.  You mention using the funds as a down-payment on a property.  Of course, it would need to be non-owner occupied (investment property).   

If your account does not have sufficient funds to acquire a property entirely, you can look into a non-recourse loan. A SDIRA cannot be a down payment on a conventional/FHA/VA type of loan. When an IRA borrows money, it needs to use a Non-Recourse loan. When an IRA borrows funds it can lead to a tax called UDFI (Unrelated Debt Financed Income Tax). You can read more about this tax at www.IRS.gov Pub 598. I also recommend you discuss this with your tax advisor.

There are many other alternative asset classes to invest SDIRA funds into.  Happy to discuss this with you further.

@Jim Stanley Keep in mind any expenses of your SDIRA asset must be paid for by the account that owns that asset.  So either you pay for the repair out of the idle cash in your account, file an insurance claim and use those funds, or rollover/transfer funds from another retirement account to cover the cost. 

@Brad Herb Costin makes a point about Cost Segregation accelerating depreciation.  You will be able to take advantage of it in a SDIRA if the syndication also has taken on debt and therefore passes UDFI on to your account.  When your tax professional prepares your 990t they will utilize the Cost Seg to minimize the UDFI tax.  Discuss this with your competent tax professional.  I use @Amanda Han of Keystone CPA.

A Solo(lk) is not always exempt from UDFI Tax. Additionally, you could not move your Roth IRA funds into a Solo(k) because for some reason unknown to even the Department of Treasury (I asked them) Roth IRAs cannot transfer into the Roth bucket of a Solo 401(k).

Brad: Syndications are the #1 asset class for SDIRAs. Each offering is different, so your answer starts with a good look at the numbers. The account fees are minimal compared to the potential gain with most syndication offerings. One thing to watch out for... it is a tax, but not an income tax (so it applies to Roth accounts as well). That is called UDFI. Unrelated Debt Financed Income Tax. Ask the asset sponsor if they have debt in their capital stack. If so, your IRA will most likely need to file a 990t tax return annually and pay this tax. You can read more about it at www.IRS.gov Pub 598.  When your tax professional calculates your UDFI tax, you can obtain information from the asset sponsor for potential write-offs.  Often syndicators will do a Cost Segregation, and this can minimize UDFI tax.  Happy to discuss this with you further. 

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